Globalisation

Globalisation has an uneven impact, regionally and socially. This has been seen very clearly in the UK in recent years, with relatively steady economic growth offset by sustained income and wealth inequality. The current government has shied away from some progressive tax options for fear of provoking the emigration of wealthy individuals. Liberal Democrat tax policy is outlined in Policy Papers 75 Fairer, Simpler, Greener and Policy Paper 81 Reducing the Burden. The key strands include increasing green taxation and removing tax breaks which primarily help the well-off in order to cut income tax for low and middle earners. For business, we propose to simplify corporation tax by removing complex reliefs and cutting the overall rate of tax; and remove unnecessary regulations by moving to a General Anti-Avoidance Rule.

It is important that all people as well as governments should take responsibility for their personal and collective future. However, poorer or peripheral communities are often remote not only from good employment opportunities, but also from markets, social networks and information. The aim of national, regional and local governments should be to facilitate individuals and communities to find their own ways to regenerate through participation. Liberal Democrat policies to promote local regeneration are set out in Policy Paper 77, Green and Prosperous Communities.

No matter how much education and training is available, some people will be short of suitable skills, at any given time, in a fast-changing global economy. The government currently proposes to enable people to enhance their employability through a programme linked to individual learning accounts called ‘Train to Gain.’ It remains to be seen how much choice and flexibility this will offer to individual learners.

There is also a need to think more widely about the role of the welfare state in a globalised economy. It has often been assumed that high welfare spending can create disincentives for individuals and lead to economic stagnation. However, evidence from smaller, yet more globalised economies – like the Netherlands – suggests that it may also provide a buffer, supporting individuals to retrain and develop different skills, instead of falling back into unskilled jobs.

Globalisation has also increased international economic migration, both to and from the UK. Truly free markets, as envisaged by Adam Smith, would include free movement of labour, as in the EU. Liberal Democrats celebrate diversity and the greater international outlook that it brings to society, but we recognise that large-scale immigration can have major impacts on local communities, including additional pressures on social services and housing, and rapid changes in the cultural environment. There is also a set of concerns around effects on the labour market and added competition for employment opportunities, particularly for low-skilled individuals. It therefore remains important for national governments to manage the social impact of immigration.

Issues to consider

12. How best can local communities be empowered to benefit from global economic opportunities?
13. What are the best ways to provide training to people with low skills?
14. Is increased welfare spending a threat to the UK’s global competitiveness?
15. Might increased welfare spending help individuals and groups to gain from globalisation, who might otherwise not do so?
16. Should more or less economic migration be encouraged? How can diverse communities best be encouraged to accommodate each other?
17. Is there more we can do to promote community cohesion?